Litigation Release No. 17075 \ July 23, 2001

The Securities and Exchange Commission announced that on July 13, 2001, it filed a Motion for an Order to Show Cause why the Cincinnati law firm Brown Cummins & Brown Co., L.P.A. (Brown Cummins) should not be held in contempt for violating the Order of Permanent Injunction and Order Appointing a Receiver entered by the United States District Court for the Southern District of Ohio in SEC v. Donahue and Donahue Securities Inc. Specifically, the Commission's Motion alleges that after entry of the Court's Order of Permanent Injunction on February 26, 2001, Brown Cummins transferred at least $148,000 in frozen funds belonging to Defendant Stephen G. Donahue (Donahue) into its general operating account to pay Donahue's legal fees in violation of the asset freeze imposed by the Order of Permanent Injunction. The Motion also alleges that Brown Cummins failed to turn over funds belonging to Donahue to the court-appointed Receiver as required by the Court's Order Appointing a Receiver entered on March 6, 2001. In its Motion, the Commission is seeking an order finding Brown Cummins in civil contempt and requiring Brown Cummins to deliver the funds it transferred in violation of the Court's Orders to the court-appointed Receiver.

The Court's Order of Permanent Injunction entered on February 26, 2001 pursuant to Donahue's consent, permanently enjoined Donahue from further violating the antifraud provisions of the federal securities laws, froze all funds belonging to Donahue or in which he held a beneficial interest and ordered Donahue to pay disgorgement and civil penalties in an amount to be determined in a separate hearing. The Court's Order Appointing a Receiver entered on March 6, 2001, among other things, ordered all persons, including attorneys, to turn over to the receiver any property owned by Donahue or in which Donahue had an interest. The Orders were entered based on the Commission's Complaint filed on February 26, 2001, which alleged that Donahue engaged in a 12-year scheme to misappropriate at least $6 million from at least 200 of his brokerage clients.